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The government has released draft legislation to implement part of its budget package aimed at reducing administrative burden for small businesses.
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SMBs to be given four years to amend returns under proposed legislation
29 July 2024
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Treasury has released draft legislation which will extend the period that small and and medium businesses have to self-amend returns from two to four years.
The legislation will amend the ITAA 1936 to provide small and medium business entities up to four years after the Commissioner has given a notice of an assessment to apply to have the assessment amended.
Under the existing legislation, the standard limitation period in which the Commission can amend an assessment of a small and medium business entity is two years.
The explanatory materials explained that the short two year period was intended to provide swift certainty for taxpayers about their income tax liabilities.
"However, this timeframe has led to an increased number of these taxpayers' lodging objections and pursuing appeals of objection decisions by the Commissioner, resulting in increased administrative burden for such taxpayers," it said.
Treasury said the change "will reduce the administrative costs of amendments on small and medium businesses by delaying their engagement with the burdensome amendment process currently required when the existing 2‑year self-amendment period expires".
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This amendment will also alleviate some of the administrative and financial burden for the Commissioner, it said.
Under the proposed provisions, the Commissioner may only amend assessments to give effect to a decision in relation to the taxpayer's application.
"The provisions do not permit the Commissioner to amend the assessment about other particulars that are not included in the taxpayer's application," said Treasury.
The measure is part of a broader package of small business measures announced as part of the 2023-24 Federal Budget.
The package, Driving Collaboration with Small Business to Reduce the Time Spent Complying with Tax Obligations’ was aimed at delivering reforms to cut paperwork and reduce the time small businesses spend doing taxes.
The government is currently seeking feedback on the effectiveness of the exposure draft and the explanatory materials in explaining the policy context and operation of the new law.
Treasury said it will work closely with the ATO to identify aspects of new tax laws which may benefit from ATO public advice and guidance.
"Feedback is also sought on any aspects of the new law where the ATO's public advice and guidance should be considered to support stakeholders' understanding and application of the new law.
Consultation on the draft legislation ends on 9 August.
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